The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD Act) became law in May 2009, bringing forward significant change for the credit card industry. For consumers, it provides a long list of new protections against deceptive or unfair business practices. For college and university administrators, it includes specific language that addresses credit card marketing to students on college and university campuses.
Here are some key provisions in the CARD Act specific to Higher Education:
- Requires banks and other card issuers to provide a reason for participating on college campuses and at university-themed events.
- Prohibits banks and other card issuers from giving gifts or any promotional items (such as coupons for free pizza) in order to entice students into signing with their credit cards.
- Bans the issuing of a credit card to someone under the age of 21, unless they have a co-signer (who is 21 or older) or can provide proof of a means to repay.
Recently, the Attorney General of the State of New York, Andrew Cuomo, has initiated an investigation into credit card marketing practices that target students. As part of his investigation, Attorney General Cuomo sent letters to 300 New York colleges and universities requesting they submit for review any exclusive contracts they have with credit and debit card companies. He also urged them to commit to a Credit Card Code of Conduct that includes guidelines such as prohibiting schools from sharing personal student information with card companies without a student's prior permission.
You can, of course, view this as strictly a New York issue. However, it would be prudent to take an inventory of your institution's contracts with card issuers — both credit card and debit card. In particular, look for any exclusive arrangements and understand how they might fit into this new Code of Conduct. After all, Mr. Cuomo's reach beyond New York schools has been ably demonstrated by his impact on the student loan industry.
Thanks for reading.
PS: You can find more information online about the CARD Act of 2009 and Mr. Cuomo's investigations into compliance by schools in New York:
Text of the CARD Act (H.R.627)
Reference to CARD Act by NACUBO's Anne Gross
Student Credit Card Investigation by NY Attorney General